THE localisation of Council Tax support means change for most of rural England's low income households, finds Brian Wilson.

THE localisation of Council Tax support means change for most of rural England's low income households, finds Brian Wilson.

The New Policy Institute has recently completed research for the Joseph Rowntree Foundation, in which it explored the impact of changes made to Council Tax Benefit from April 2013.

Readers may recall this was a fairly radical (and contentious) policy change. Moreover, it is part of the wider shake-up of the welfare system which is underway.

The previous national system of Council Tax Benefit was abolished and replaced with a localised system, known as Council Tax Support. From 2013/14 it is, in England, the 326 district, borough and unitary authorities which have assumed management of this system.

It is now largely for these authorities to decide how that system will work within their area.

The other key change was that government cut the overall budget for this benefit by 10%. Or, to be accurate, the funding which central government is now handing over to local authorities is a tenth smaller than its budget had been for Council Tax Benefit.

Local authorities do not, though, have a completely free hand. Legislation doesn't allow them to cut the level of benefit support that is given to some 2.7 million eligible pensioners. The notional impact on other (working age) households is therefore in excess of ten per cent.

Moreover, the impact of the changes will be greater in England than elsewhere in the UK, since both the Scottish Parliament and Welsh Assembly have decided to make up the ten per cent shortfall from their other resources.

The New Policy Institute has been reviewing the agreed final or proposed final schemes for 2013/14 of all English local authorities.

This has found that 18% of local authorities have retained the benefit at its previous level, by making good the ten per cent shortfall from their own resources. A further 11% have a scheme that increases the Council Tax payment for certain groups of benefit recipients.

The majority (71%), however, have a scheme which now requires all working-age adults to pay at least some Council Tax, regardless of income.

The research finds that almost four fifths of those who are affected by these changes have, prior to this year, been paying no Council Tax. The schemes being put in place mean that local authorities will now need to collect an average of £140 per year from these households.

While this may seem a sizeable sum to find for a low income household, the research notes local authorities may not find it economic to spend much time chasing down what for them is a modest amount. This could have implications for levels of non-payment and non-collection.

In total some 2.4 million working age households are expected to pay more in Council Tax as a result of this change. On average they will pay £138 more in 2013/14 than they did in 2012/13. Given localisation this masks considerable variation across the country. For 1 million recipients this increase will be up to £100: for 150,000 the increase will exceed £300.

Indeed, it is not just the level of increase which alters from one local authority area to another. The affect on different household groups varies too, depending on the design of local schemes. Schemes may be banded, tapered and capped in differing ways.

This research doesn't present the individual schemes of local authorities, so it is not possible to assess what it means for rural low income households nor whether there is a particular rural dimension to the changes. A back of an envelope calculation says that more than half a million rural households are likely to be recipients of Council Tax Support.

It may be that smaller rural local authorities with fewer resources (per head of population) than their urban counterparts would – if they wished to – find it harder to make up the ten per cent shortfall. We also know that Council Tax bills are higher in rural than in urban authorities.

It would be interesting to hear from RSN members if they have rural evidence.

For the New Policy Institute the results of their research point to a financial hit on some of the poorest households. Government would no doubt point to its stated objectives for these changes, including its desire to incentivise more people to move off welfare and into employment.

Central government also views this as permitting variation to suit local circumstances. It fits with its agenda for local government financial freedoms and flexibilities. The researchers recognise this argument up to a point, whilst noting that it introduces complexity to the welfare system.

Some research in a year's time to review the outcomes of these (and other inter-related welfare) changes would seem useful. Ideally with a rural cut on the findings. Let's hope someone is planning for it.

This article was written by Brian Wilson whose consultancy, Brian Wilson Associates, can be contacted at [email protected]. Brian also acts as the RSN Research Director.